Stuart v. Scottsdale, City of

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Mark E Stuart, et al., No. CV-20-00755-PHX-JAT

10 Plaintiffs, ORDER

11 v.

12 City of Scottsdale, et al.,

13 Defendants. 14 15 Pending before the Court are Defendants’ Motion for Partial Summary Judgment 16 (Doc. 97), Plaintiffs’ Response (Doc. 103), and Defendants’ Reply (Doc. 105). This Court 17 now rules. 18 I. BACKGROUND 19 Plaintiffs filed the original Complaint on April 17, 2020 and the Second Amended 20 Complaint on March 21, 2021 alleging four violations of 28 U.S.C. § 1983 and seven state 21 law violations related to wrongful garnishment of their community property. (Doc. 93). 22 Plaintiffs are a married couple, Mark and Virginia Stuart. (Doc. 93 at 4). Defendant City 23 of Scottsdale holds a judgment against Mark Stuart in the amount of $30,115 for the cost 24 of attorney’s fees incurred in defending a previous lawsuit which Plaintiff Mark Stuart 25 initiated. (Doc. 93 at 4). In the current litigation, Plaintiffs allege that the City of Scottsdale 26 and several of its employees wrongfully garnished Plaintiffs’ community property in 27 attempting to collect the underlying judgment for attorney’s fees. (Doc. 93 at 8). Plaintiffs 28 claim that, because Mr. Stuart’s wife was not a named party in the previous judgment, 1 community property of the married couple should not be subject to garnishment. (Doc. 93 2 at 8). Plaintiffs allege that in attempting to collect this judgment, Defendants violated 3 several state laws and the U.S. Constitution. (Doc. 93). 4 On April 16, 2021 Defendants filed the instant Motion for Partial Summary 5 Judgment. (Doc. 97). Defendants Bruce Washburn and Eric Anderson claim that Plaintiffs 6 did not comply with the Arizona notice of claim statute, A.R.S. § 12-821.01(A), and 7 therefore any state law claims against them should be dismissed. (Doc 97 at 9). Defendants 8 W.J. Lane, Bruce Washburn, Eric Anderson, Suzanne Klapp, Virginia Korte, Linda 9 Milhaven, Kathy Littlefield, Guy Phillips, and Solange Whitehead claim that, as employees 10 of the City of Scottsdale, they are entitled to qualified immunity from any federal law 11 claims. (Doc. 97 at 15). Plaintiffs argue that there is a genuine dispute of material fact about 12 whether Defendants Washburn and Anderson received notice of the claim, and that the 13 individual defendants are not entitled to qualified immunity. (Doc. 103 at 12, 15). 14 II. LEGAL STANDARD 15 A party may move for summary judgment on any claim or defense under Rule 56 16 of the Federal Rules of Civil Procedure. Summary judgment should be granted “if the 17 movant shows that there is no genuine dispute as to any material fact and the movant is 18 entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Under Rule 56, a party 19 asserting that a fact cannot be disputed must support this claim by “citing to particular parts 20 of materials in the record” or by “showing that the materials cited do not establish the 21 absence or presence of a genuine dispute, or that an adverse party cannot produce 22 admissible evidence to support the fact.” Fed. R. Civ. P. 56(c)(1). Thus, summary judgment 23 is mandated, “. . . against a party who fails to make a showing sufficient to establish the 24 existence of an element essential to that party’s case, and on which that party will bear the 25 burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 26 The party moving for summary judgment bears the initial burden of informing the 27 district court of the basis of the summary judgment motion, and of demonstrating the 28 absence of a genuine issue of material fact for trial. See Celotex, 477 U.S. at 323; Katz v. 1 Children’s Hosp. of Orange County, 28 F.3d 1520, 1534 (9th Cir. 1994). On an issue for 2 which the nonmoving party has the burden of proof at trial, the moving party need only 3 point out “that there is an absence of evidence to support the nonmoving party’s case.” 4 Celotex, 477 U.S. at 325. Once this initial burden is satisfied, the nonmoving party is 5 required to “go beyond the pleadings and by her own affidavits, or by the depositions, 6 answers to interrogatories, and admissions on file, designate ‘specific facts’ showing that 7 there is a genuine issue for trial.” Celotex, 477 U.S. at 324; see also Nilsson, Robbins, 8 Dalgarn, Berliner, Carson & Wurst v. Louisiana Hydrolec, 854 F.2d 1538, 1544 (9th Cir. 9 1988). Where the standard of proof at trial is preponderance of the evidence, the 10 nonmoving party’s evidence must be such that a “fair-minded jury could return a verdict 11 for the [nonmoving party] on the evidence presented.” Anderson v. Liberty Lobby, Inc., 12 477 U.S. 242, 252 (1986). 13 III. DISCUSSION 14 Defendants raise two arguments in their Motion for Partial Summary Judgment. 15 First, Defendants argue that Plaintiffs did not comply with the Arizona notice of claim 16 statute, A.R.S. § 12-821.01(A), when providing notice to Defendants Washburn and 17 Anderson. (Doc. 97 at 9). Second, Defendants Lane, Washburn, Anderson, Klapp, Korte, 18 Milhaven, Littlefield, Phillips, and Whitehead claim to be entitled to qualified immunity 19 from any federal law claims. (Doc. 97 at 13). The Court will address these arguments in 20 turn. 21 A. Notice of the Claim 22 Defendants argue that Plaintiffs did not comply with the Arizona notice of claim 23 statute because they only provided notice to the Clerk of the City of Scottsdale and not to 24 Defendants Washburn and Anderson individually. (Doc. 97 at 9–13). Plaintiffs argue that 25 there is a genuine dispute of fact as to whether Defendants received notice of the claim and 26 that service to the City Clerk was sufficient. (Doc. 103 at 12–15). 27 1. Legal Standard 28 Before initiating an action for damages against a public entity, a plaintiff must 1 provide a notice of claim to the entity in compliance with A.R.S. § 12-821.01. Deer Valley 2 Unified Sch. Dist. No. 97 v. Houser, 152 P.3d 490, 491 (Ariz. 2007). When bringing a claim 3 against an individual, a plaintiff must provide notice to the individual or “persons 4 authorized to accept service for the public entity or public employee as set forth in the 5 Arizona Rules of Civil Procedure. . . .” A.R.S. § 12-821.01(A). Under Rule 4.1(d)(3) of 6 the Arizona Rules of Civil Procedure, agents “authorized by appointment or by law to 7 receive service of process” may accept notice for an individual. Ariz. R. Civ. P. 4.1(d)(3); 8 see Peck v. Hinchey, No. CV-12-01371-PHX-JAT, 2014 WL 10987731 (D. Ariz. Mar. 14, 9 2014), aff’d in part, rev’d in part and remanded, 655 F. App’x 534 (9th Cir. 2016), as 10 amended on denial of reh’g (July 12, 2016) (holding that an agent must be authorized by 11 appointment or by law to receive service of process). If such an agent does not exist for an 12 individual, then a copy of the notice must be delivered to the individual personally or left 13 at their abode with someone of suitable age who resides there. Ariz. R. Civ. P. 4.1(d)(2)– 14 (3). Service on a city clerk does not constitute notice to city employees in their individual 15 capacities. See Simon v. Maricopa Med. Ctr., 234 P.3d 623, 629 (Ariz. Ct. App. 2010). 16 “Actual notice and substantial compliance do not excuse failure to comply with the 17 statutory requirements of A.R.S. § 12–821.01(A).” Falcon ex rel. Sandoval v. Maricopa 18 County 144 P.3d 1254, 1256 (Ariz. 2006) (citation omitted). 19 State officers and employees sued in their official capacity are immune from 20 lawsuits seeking money damages. Ford Motor Co. v. Dep’t of the Treas., 323 U.S. 459, 21 464 (1945) (“[W]hen the action is in essence one for the recovery of money from the state, 22 the state is the real, substantial party in interest and is entitled to invoke its sovereign 23 immunity from suit even though individual officials are nominal defendants.”). The 24 purpose for naming a governmental employee as a party in his or her official capacity is to 25 seek an injunction of an ongoing constitutional violation. See Edelman v. Jordan, 415 U.S. 26 651, 677 (1974). “An action does not abate when a public officer who is a party in an 27 official capacity dies, resigns, or otherwise ceases to hold office while the action is pending. 28 The officer’s successor is automatically substituted as a party.” Fed. R. Civ. P. 25(d)(1). 1 2. Analysis 2 In this case, Plaintiffs attempted to provide notice of the claim to Defendants 3 Washburn and Anderson by notifying the Clerk of the City of Scottsdale. (Doc. 103 at 14). 4 As the Clerk of the City of Scottsdale is not an agent “authorized by appointment or by 5 law” to accept notice for Defendants in their individual capacities, this was insufficient for 6 the purposes of A.R.S. § 12-821.01(A). See Simon, 234 P.3d at 629 (holding that providing 7 notice to a city clerk did not constitute notice on individual police officers). As a result, 8 Plaintiffs have not adequately complied with the notice of claim statute regarding 9 Defendants Washburn or Anderson in their individual capacities. See Falcon ex rel. 10 Sandoval, 144 P.3d at 1256 (holding that delivering notice to a single member of a county 11 board of supervisors did not provide notice to the remaining members of the board because 12 they were not authorized to accept service for the remaining members). 13 Plaintiffs also contend that they mailed notice of the claim to Defendants Washburn 14 and Anderson’s place of employment, and thus there exists a genuine dispute of material 15 fact as to whether Defendants received notice. (Doc. 103 at 12). While mail is an authorized 16 method of delivering notice of a claim to a government entity, filing notice by mailing it to 17 Defendants’ place of employment is not sufficient for filing with individuals under A.R.S. 18 § 12-821.01(A). See Lee v. State of Arizona, 182 P.3d 1169, 1173 (Ariz. 2008) (allowing 19 for mailing notice of a claim only upon a governmental entity); see also Kenney v. City of 20 Mesa, No. 1 CA-CV 12-0377 A, 2012 WL 5499424, at *6 (Ariz. Ct. App. 2012) (noting 21 that personal delivery is required in the case of “individuals, not governmental 22 subdivisions,” and that “notices of claim may be accomplished by regular mail delivery” 23 only in the case of governmental subdivisions). The Arizona notice of claim statute states 24 that notice must be filed with someone authorized to accept service under the Arizona 25 Rules of Civil Procedure. A.R.S. § 12–821.01(A); see Simon, 234 P.3d at 629. Mailing 26 notice to a governmental employee at their place of work could not reasonably comply 27 with Rule 4(d) which outlines who is authorized to accept service for individuals. Ariz. R. 28 Civ. P. 4(d); see Simon, 234 P.3d at 629 (“To perfect his claims against an individual 1 officer, [plaintiff] had to deliver a notice of claim to the officer personally, [to] an 2 individual of suitable age and discretion residing with the officer, or the officer’s appointed 3 agent.”). 4 Plaintiffs’ assertion that they e-mailed notice directly to Defendants necessarily fails 5 for the same reasons. Whether Defendants Washburn or Anderson received actual notice 6 of the claim is irrelevant if Plaintiffs did not comply with the notice of claim statute. See 7 Falcon ex rel. Sandoval, 144 P.3d at 1256 (holding that strict compliance with the notice 8 statute is required). Thus, Plaintiffs’ have failed to meet their burden at summary judgment 9 in presenting evidence of a genuine dispute of material fact regarding compliance with the 10 notice of claim statute. Fed. R. Civ. P. 56. Accordingly, all state law claims against 11 Defendants Washburn and Anderson in their individual capacities are dismissed. 12 B. Qualified Immunity 13 Defendants argue that the individual Defendants are entitled to qualified immunity 14 because Plaintiffs have not pointed to a “clearly established constitutional right allegedly 15 violated by the Defendants.” (Doc. 97 at 13). Plaintiffs argue that under Arizona state law 16 both parties of a marriage must be named in a judgment against community property, and 17 thus the garnishment of their community property violated the Fourth and Fourteenth 18 Amendments. (Doc. 103 at 17–29). 19 1. Legal Standard 20 Under 42 U.S.C. § 1983, state officials are liable for civil damages only insofar as 21 they tread on “clearly established statutory or constitutional rights of which a reasonable 22 person would have known.” Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982). This doctrine, 23 known as qualified immunity, balances “the need to hold public officials accountable when 24 they exercise power irresponsibly and the need to shield officials from harassment, 25 distraction, and liability when they perform their duties reasonably.” Id. “It represents ‘the 26 norm’ for public officials, and serves to insulate from suit ‘all but the plainly incompetent 27 or those who knowingly violate the law.’” Lewis v. Tripp, 604 F.3d 1221, 1225 (10th Cir. 28 2010) (citations omitted). Thus, “unless a plaintiff pleads facts showing (1) that the official 1 violated a statutory or constitutional right, and (2) that the right was ‘clearly established’ 2 at the time of the challenged conduct,” qualified immunity prevents the lawsuit from 3 proceeding further. Ashcroft v. al-Kidd, 563 U.S. 731, 735 (2011) (quoting Harlow, 457 4 U.S. at 818); see also Conner v. Heiman, 672 F.3d 1126, 1133 (9th Cir. 2012) (extending 5 qualified immunity to state officials on § 1983 conspiracy claims for failure to show 6 violation of “clearly established” rights). 7 “To be clearly established, a right must be sufficiently clear that every reasonable 8 official would have understood that what he is doing violates that right.” Hamby v. 9 Hammond, 821 F.3d 1085, 1090–91 (9th Cir. 2016). In rare cases, a violation may be so 10 obvious that every reasonable official would be on notice that the conduct in question was 11 unlawful. Sharp v. County of Orange, 871 F.3d 901, 911 (9th Cir. 2017) (collecting cases). 12 Normally, however, an official is on notice only when existing precedent has “placed the 13 statutory or constitutional question beyond debate.” Ashcroft, 563 U.S. at 741; see also 14 Sharp, 871 F.3d at 911 (explaining that the relevant precedent must be either controlling 15 in the relevant jurisdiction or embraced by a consensus of cases outside the jurisdiction). 16 Thus, to survive a motion to dismiss based on qualified immunity, a plaintiff “must point 17 to prior case law that articulates a constitutional rule specific enough to alert these 18 [officials] in this case that their particular conduct was unlawful.” Hernandez v. City of San 19 Jose, 897 F.3d 1125, 1137 (9th Cir. 2018) (emphasis omitted). 20 Under Arizona law, a debt or obligation incurred by one spouse while acting for the 21 benefit of the marital community serves as a community debt or obligation. See Greer v. 22 T.F. Thompson & Sons, Inc., No. CV-10-799-PHX-SMM, 2013 WL 4512055 at *4 (D. 23 Ariz. Aug. 26, 2013). This is true regardless of whether the other spouse approved the debt 24 or the conduct giving rise to the obligation. A.R.S. §§ 25-214(B) (“The spouses have equal 25 management, control and disposition rights over their community property and have equal 26 power to bind the community.”); § 25-214(C) (“Either spouse separately may acquire, 27 manage, control or dispose of community property or bind the community. . .”); Ellsworth 28 v. Ellsworth, 423 P.2d 367 (Ariz. Ct. App. 1967) (“If the husband acts with the object of 1 benefiting [sic] the community. . . the obligations so incurred by him are community in 2 nature, whether or not the wife approved thereof.”) (citation omitted). “A debt incurred 3 during a marriage for the benefit of the marital community is presumed to be a community 4 obligation unless clear and convincing evidence exists to the contrary.” Arab Monetary 5 Fund v. Hashim, 193 P.3d 802, 805 (Ariz. Ct. App. 2008) (citing United Bank of Ariz. v. 6 Allyn, 805 P.2d 1012, 1019 (Ariz. Ct. App. 1990)). 7 The court in Parenteau v. Prescott Unified Sch. Dist. articulated the rare issue of 8 collecting sanctions from the community property of an attorney when it said:

9 If Lassen’s argument that the Lassen community property is exempt from execution because Mrs. Lassen was not joined 10 before Judgment was entered succeeded, every litigation- related monetary sanction imposed by a federal or state trial 11 judge upon a married Arizona lawyer for frivolous or other wrongful litigation actions would be uncollectible against such 12 lawyer’s community property and would not deter lawyers from filing groundless or frivolous litigation. Lassen has failed 13 to demonstrate by clear and convincing evidence that the Lassen community property is exempt from execution on the 14 judgment for fees and costs entered in this case as a sanction.

15 No. CV-07-8072-PCT-NVW, 2009 WL 10673616, at *5 (D. Ariz. Dec. 9, 2009), report 16 and recommendation adopted, No. CV 07-8072-PCT-NVW, 2010 WL 11515677 (D. Ariz. 17 Jan. 12, 2010). Thus, although sanctions are not exactly the same as traditional debts, they 18 are treated the same as traditional debts for the purposes of binding the community property 19 of a married couple. Id. 20 2. Analysis 21 Here, Plaintiffs assert that the garnishment against their community property was 22 an unjust taking that violated due process. (Doc. 103 at 17–29). In attempting to show this 23 was a violation of clearly established law, Plaintiffs point to cases which reiterate that a 24 judgment against an individual defendant cannot be collected through their community 25 property. (Doc. 103 at 23) (“Under well-established Arizona law, Scottsdale did not have 26 a legal right to seize the plaintiffs’ community property to enforce its judgment against 27 Mark Stuart. See Shaw, 67 Ariz. 225; Petzhold, 77 Ariz. 409; Eng, 123 Ariz. 346; Putzi, 28 151 Ariz. 480; Hudman, 177 Ariz. 70.”). Several of the cases cited by Plaintiffs to support 1 their argument rely on A.R.S. § 25–215(D) which states: “In an action on such a debt or 2 obligation the spouses shall be sued jointly. . . .” However, this statute only applies to 3 claims, naming spouses as defendants, brought to collect a debt or obligation, which is not 4 the case here. § 25–215(D). The judgment at question arises from a sanction issued against 5 Plaintiff Mark Stuart during litigation he brought for the benefit of his marital community 6 in which he served as the plaintiff. (Doc. 97 at 2); see Hofmann Co. v. Meisner, 497 P.2d 7 83, 88 (Ariz. Ct. App. 1972) (“For an act to be done with the intent of benefitting the marital 8 community, it is not necessary that the husband’s primary intent be for the benefit of the 9 community. All that is required is that some benefit was intended for the community.”). 10 The cases on which Plaintiffs rely are distinguishable from the instant case. When 11 Plaintiff Mark Stuart filed the original action against the City of Scottsdale, resulting in the 12 sanctions against him, he bound his marital community with respect to the fee-shifting 13 statute A.R.S § 12-341.01. See Greer, 2013 WL 4512055 at *4. This is reflected in A.R.S. 14 § 25–215(C) and in Ellsworth which both state that either spouse may bind the community 15 to a financial obligation. See Ellsworth, 423 P.2d at 367. 16 Plaintiff Mark Stuart does not provide any evidence that his original action against 17 the City of Scottsdale was for his sole benefit and so it will be presumed to have been 18 brought for the benefit of the community. See Arab Monetary Fund, 193 P.3d at 805 (noting 19 that Arizona caselaw requires clear and convincing proof to demonstrate that a debt is the 20 separate obligation of only one spouse). The cases Plaintiffs provide are also lacking as 21 they involve defendants that did not implicate their community property by themselves 22 bringing a legal claim. (Doc. 103 at 23). Because these cases are distinguishable from 23 Plaintiffs’ situation, they do not clearly establish that Defendants’ actions constituted an 24 illegal taking. See Ashcroft, 563 U.S. at 741 (“We do not require a case directly on point, 25 but existing precedent must have placed the statutory or constitutional question beyond 26 debate.”). The distinction between voluntarily and involuntarily binding community 27 property to a cause of action is too great for this Court to overlook. 28 Plaintiffs also argue that because Virginia Stuart was not joined in the original 1 litigation or the subsequent judgment against Mark Stuart, she was not afforded a 2 meaningful opportunity to be heard before her community property was garnished. (Doc. 3 103 at 37–40). However, Plaintiff Virginia Stuart had every right to join in the original 4 action against the City of Scottsdale from the outset of the underlying litigation, either 5 cooperatively with Mark Stuart or by moving to intervene. Ariz. R. Civ. P. 20; Ariz. R. 6 Civ. P. 24(a); see Gagan v. Sharar, 376 F.3d 987, 992 (9th Cir. 2004). Virginia Stuart does 7 not allege that she did not have full and fair notice that the underlying lawsuit was pending 8 on behalf of the community. (Doc. 103). As Mark Stuart did not possess any sole and 9 separate property to pay the filing fees and initiate the original lawsuit, community property 10 must have been used to fund that litigation. (Doc. 93 at 4). If Virginia Stuart contributed to 11 the original lawsuit via community property, then it is not clear how she was denied the 12 right to be heard, or that Defendants should have been aware that they were depriving her 13 of this right at the time of garnishment. See Gagan, 376 F.3d at 992–993 (holding that 14 appellant was not denied opportunity to be heard after procedurally defaulting on her 15 various options for appeal on the issue). 16 The cases cited by Plaintiffs to support this final argument are, again, 17 distinguishable from the instant action because they are based on judgments against 18 defendants who did not put their community property at issue by bringing their own claim. 19 (Doc. 103 at 17–29). Plaintiffs’ argument that Virginia Stuart was not heard on the original 20 claim is unpersuasive as both spouses were implicated by initiating that suit. See Greer, 21 2013 WL 4512055 at *4. Thus, this Court finds that Plaintiffs have failed to demonstrate a 22 violation of clearly established law which Defendants should have been aware of at the 23 time of garnishment. 24 The Court notes that the superior court in the underlying state action “issued a 25 Minute Entry concluding that the City’s Judgment could not reach community funds.” 26 (Doc. 97 at 4). As the superior court’s determination does not constitute controlling 27 precedent in Arizona, it does not place the statutory question beyond debate. See Ashcroft, 28 563 U.S. at 741; see also Sharp, 871 F.3d at 911. Further, the superior court’s minute entry 1 || was issued after Defendants served its writ of garnishment on Plaintiffs’ bank. (See Doc. 2|| 97 at 3-4). Thus, it could not have put Defendants on notice that they were violating a 3 || statutory or constitutional right when serving the writ. 4 Accordingly, Defendants Lane, Washburn, Anderson, Klapp, Korte, Milhaven, || Littlefield, Phillips, and Whitehead are entitled to qualified immunity on all federal claims 6|| against them in their individual capacities.! 7\| IV. CONCLUSION 8 IT IS ORDERED that Defendants’ Motion for Partial Summary Judgment (Doc. 9|| 97) is GRANTED IN PART AND DENIED IN PART: 10 Defendants Bruce Washburn and Eric Anderson, in their individual capacities, are 11 || dismissed with prejudice on counts five, six, seven, eight, nine, ten, and eleven pursuant to A.R.S. § 12-821.01(A); 13 Defendants W.J. Lane, Bruce Washburn, Eric Anderson, Suzanne Klapp, Virginia Korte, Linda Milhaven, Kathy Littlefield, Guy Phillips, and Solange Whitehead are entitled 15 || to qualified immunity in their individual capacities on counts one, two, three, and four, || and, accordingly, they are granted summary judgment on these claims on this basis. 17 Because other claims remain, the Clerk of the Court shall not enter judgment at this 18 || time. 19 Dated this 19th day of August, 2021. 20 21 a 22 James A. Teilborg 23 Senior United States District Judge 24 25 26 27 28} 1 “Qualified immunity is not available, however, to municipalities or individuals in their official capacities.” Eng v. Cooley, 552 F.3d 1062, 1064 n.1 (9th Cir. 2009). -ll-